What Does That Mean? Key Estate Planning Terms to Know

Getting started with estate planning can feel intimidating—especially when you start running into unfamiliar legal terms. But you do not need to be a lawyer to understand the basics. Knowing just a few key terms can go a long way in helping you feel more prepared and confident as you think about your future or talk things through with your family.

Below is a helpful list of common estate planning terms and what they mean:

1. Revocable Living Trust

A revocable living trust is a legal document that holds your assets during your lifetime and spells out who should receive them after your death. You stay in control of everything while you are alive and mentally capable, and you can change or cancel the trust at any time. One big advantage of using a trust is that it helps your family avoid probate, which can save time, money, and stress.

2. Will (Last Will and Testament)

A will is a legal document that outlines who should receive any assets that are not already in your trust or do not have a named beneficiary. It also lets you name guardians for minor children. Even if you have a trust, you still need a basic will—sometimes called a “pour-over will”—to make sure anything left out of the trust is still passed on according to your wishes. Unlike a trust, a will goes through probate before it can take effect.

3. Durable Power of Attorney

This document lets you name someone you trust to handle your financial matters if you become unable to do so yourself. The term “durable” means the authority remains in place even if you become incapacitated.

4. Advance Health Care Directive

Also known as a living will, this document lets you spell out your health care wishes and name someone to make medical decisions on your behalf if you are not able to speak for yourself. It is an essential part of making sure your voice is heard in a medical emergency.

5. Trustee

A trustee is the person or institution you choose to manage the assets in your trust. Their job is to follow your instructions and act in the best interests of the people or causes you have named as beneficiaries.

6. Executor

An executor is the person named in your will who is responsible for handling your estate after your death—things like paying bills, filing taxes, and distributing your assets. While similar to a trustee, an executor’s role applies specifically to carrying out the terms of a will.

7. Probate

Probate is the legal process of reviewing a will, paying off debts, and transferring property to the right people. It can take time and is a matter of public record, which is why many people use a trust to keep things private and more efficient.

8. Community Property

In some states, any property acquired during a marriage is considered jointly owned by both spouses. This can have a big impact on how property is divided or passed on when one spouse passes away.

9. Beneficiary

A beneficiary is someone you have named to receive something from your estate—whether that is through a trust, will, retirement account, or life insurance policy.

10. Funding a Trust

Creating a trust is just the first step. “Funding” the trust means transferring ownership of your assets (such as your home, bank accounts, or investments) into the name of the trust. If assets are not properly transferred, the trust may not be able to control them.

11. Conservatorship

If someone becomes unable to make personal or financial decisions and has not named someone in advance, a court may step in and appoint a conservator. A solid estate plan helps prevent the need for this by giving you control over who steps in and when.

Getting familiar with these terms is a great starting point. If you have not created an estate plan yet—or if it has been a while since you looked at it—our team at the Estate Planning Law Office of Jonathon L. Petty, Inc. is here to help. Call our office at 559-374-2223 or fill out our online contact form and we will follow up to schedule a time that works for you.